China Says No to Iran-Pakistan Gas Link

It’s a no go to a gas link from Iran via Pakistan to China.

A senior Chinese government official has revealed that the country has backed away from a plan to install a major gas pipeline from Pakistan to China, thus dealing an indirect blow to a recently-approved project to install a key trunkline from Iran to Pakistan.

The pipeline to China was proposed as an important extension to the Iran-Pakistan link.

The Chinese official told Upstream that the National Energy Agency (NEA) has discussed the project several times and has opted not to pursue it for at least the next five years.

He said the pipeline project has questionable economic feasibility and technical reliability, as it will run through high mountains with complex terrain, giving rise to concerns of operational safety and maintenance requirements.

“We would prefer instead to import gas from Iran directly,” he said.

His comments were made just days after Pakistan and Iran endorsed an agreement to build a pipeline to export Iranian gas from the South Pars field to Pakistan.

That pipeline is planned for installation from Iran’s Assaluyeh Energy Zone in the south, stretching over 1100 kilometres through Iran, and passing through Balochistan and Sindh in Pakistan. The route was said to be subject to change if China were to take part.

[cubic:3bjuw4sn][/cubic:3bjuw4sn]
China National Petroleum Corporation (CNPC), which has signed an initial agreement with National Iranian Oil Company (NIOC) to develop the 11th phase of the South Parsproject, had earlier done some study work on the pipeline.

It was listed by CNPC as one of only a few gas pipelines it planned to build outside China. But the study also referred to security concerns inPakistan and political complexities in Iran as major hurdles for the project ahead of a final investment decision.

“One of the gas pipelines that may see construction start during the 2010 to 2015 period is the Iran-Pakistan-India-China pipeline,” Zhao Zhiming, deputy executive director of China Petroleum & Petrochemical Industry Equipment Association, told the China International Oil & GasPipeline Summit in Beijing last week.

However, the official, who preferred to remain anonymous, said China has now shifted its focus to building a gas pipeline from Burma to China, with construction scheduled to officially start sometime this year.

Hojjatollah Ghanimifard, Iran’s special envoy to the $7.4 billion pipeline talks and deputy head of investment at NIOC, said he hoped the deal with Pakistan will pave the way for first gas to flow by 2014. The initial throughput is pegged at 22 billion cubic metres per annum, growing to 55 Bcm at a later stage.

The 2700-kilometre pipeline was initially supposed to supply gas to India as well, but this element was excluded from the contract after China walked away from the negotiations last year, partly due to concerns about US sanctions relating to Iran’s nuclear programme.

The report said that the Pakistani government on 20 March approved Iran’s proposed pricing formula for gas supplies.

The proposal to link that pipeline to China’s Xinjiang region would have involved an extension of at least 1000 kilometres, passing through one of the world’s highest and most geologically complex mountain ranges through the Karakoram highway.